You get what you give – or in the case of UC, you may get slightly more, with interest.
After state budget cuts left no money from bond sales to support important building projects, UC will now rely on interest from a $199.8 million loan to fund ongoing construction at eight of the 10 UC campuses.
The General Obligation Loan was paid for with the sale of commercial paper, which raised the $199.8 million. The state will pay back the loan with a 3.2 percent interest, which will total to approximately $200 million by the end of the three-year long loan period.
“In the end we’ll possibly be earning,” said UC spokesperson Steve Montiel. “But we look at it as a wash because the interest rates could rise.“
The funds will go toward time sensitive and voter-approved projects, such as construction for buildings already underway or in danger of losing funding.
“UC is in a bind in trying to finish these facilities,” said Tim Timar, professor of education and an expert in education finance and governance. “The longer you wait with construction projects like these, the more expensive they get. So the strategy seems like a good one, given the difficult financial situation the state and UC and facing.“
The bond issues were approved by voters in 2004 and 2006 and are designated for educational uses. Critics have scrutinized the usage of the loan because it funds construction, and not student fees or employee pay, which have endured harsh cuts, but the funds could not be transferred, Timar said.
“People who think that the university has money sitting in a piggy bank and they’re using it to build instead of tuition – it’s not about that,” he said. “The money couldn’t be used for these things anyway.“
At UC Davis, $35.1 million of the $200 million will fund a four-story Telemedicine Resource Center. The center will provide health care advice from UC Davis Medical School for rural clinics and hospitals via teleconference.
“In order to improve health-care delivery, especially in smaller, rural communities that have never had the same access to quality care that urban residents enjoy, doctors will need to have considerable expertise in the use of advanced information technology,” said Thomas Nesbitt, executive associate dean for administration and outreach and founder of the UC Davis telemedicine program.
“The new center will provide the resources and training necessary for helping improve both health care and health for all patients.“
The facility, expected to break ground before the new year starts, will house the UC Davis Center for Health and Technology, in addition to a virtual hospital for training and education, and technology-smart classrooms. It will also serve as a resource and learning center for the members of UC system.
Planners originally believed that funds from Proposition 1D would support construction, however the proposition’s failure in the polls prevented groundbreaking. The interest money will completely fund the $35 million facility.
“The programs that will be available at the Center will prepare future doctors in the use of telecommunications technologies and allow today’s physicians to stay abreast of the latest advances in medical science,” Nesbitt said.
LAUREN STEUSSY can be reached at firstname.lastname@example.org.